Re: Subsidies...

From: (Alain Deckers)
Organization: PREST, University of Manchester
Date:         09 Apr 96 14:22:52 
References:   1
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On 30 Mar 96 16:01:11 , David Lednicer <> wrote:

<lots of really interesting info (Thanks David) snipped>

>	Now, Airbus was set up with loans from the French and German
>governments that were written off as they came due (Aviation Week and
>Space Technology had articles on the write-offs, as they happened).

The British government also contributed about stlg100 million as a
'back-payment' towards the A300 and A310 when British Aerospace
re-joined Airbus in 1979.

>Additionally, launch costs of the A300, A310 and A320 were also financed
>by the same governments, plus Britain, in the case of the A320.

To my knowledge, they also financed, at least partly, the development
of the A330/340 family, though I don't know the details.

<brief snip>

>Siddley, after ammalgamation into British Aerospace, was government owned,

The British aircraft industry (including British Aerospace and Shorts)
was only briefly publicly-owned from 1979. British Aerospace's was one
of the early privatisations carried out by Mrs. Thatcher's
Conservative governments in the early to mid-1980s.

>but now is privately held.  I think the German partner, MBB, now Daimler
>Benz Aerospace, has always been private sector.  I am guessing that CASA,
>the Spanish partner, is government owned, but I could be wrong on this one.

Current ownership status and share participation of Airbus Industrie
partners: (best viewed using fixed-width fonts ;)

Company               Country          Share (%)      Ownership
Aerospatiale          France           37.9           Public
British Aerospace     United Kingdom   20.0           Private
CASA                  Spain             4.2           Public
Deutsche Airbus       Germany          37.9           Private

In addition, Fokker was/is (I don't know what's going to happen to its
participation in Airbus after the bankrupcy petition) and the Belgian
consortium BelAirbus (SABCA and SONACA) is an Airbus 'associate
member'. Im not sure exactly what the legal relationship between
Airbus and an associate member is.

Fokker's holding company was until recently majority owned by Daimler
Benz Aerospace (which also owns Deutsche Airbus), with a minority
participation (and lots of cheap "loans") by the Dutch government.

SABCA is majority (51%) owned by Dassault of France (Fokker own(s/ed)
a 42% share), while the regional government of Wallonia (southern
Belgium) holds a majority (90%) stake in SONACA.

>	On the issue of government funding for technology development -
>yes, NASA does fund this and support this, but so does ONERA in France,
>DFVLR (now DLR) in Germany, RAE (now DRA) in Britain, NLR in the
>Netherlands, etc.

True, and it would be interesting to see what the overall (civil and
defence) aeronautical research budgets add up to on either side of the
Atlantic. I'll try to collect this data and publish it in this group.
Alternatively, if anyone has the figures at hand, you could save me
some work. ;)

>Overall, this happens everywhere.  ONERA, for example,
>exists largely to support Aerospatiale.

Hmmm... I'll put this last statement down to literary licence. ;)
ONERA is heavily involved in military aviation, and the principal
military aircraft firm in France is, and has been for a long time,
Dassault. Aerospatiale also has its own R&D centre near Paris.

>	Military production has helped support airliner development, as
>mentioned already.  However, this is not just an American phenomona.  The
>French and British threw incredible amounts of money at military aircraft
>programs in the late 1940s and 50s.  The Germans did too, but because of
>postwar limitations, didn't get started until later.  In fact, a lot of this
>money came from the US, via NATO.  The USAF owns quite a few Dassault
>Mysteres, for example, because they actually paid for them (this is how
>several have ended up in museums in the UK)!

True, but the European NATO countries have bought many more US
aircraft than the other way around. The German aerospace industry's
technical capability was re-built largely through licence production
of US military aircraft (F-104, F-4), for example. There are many
dozens of F-16s (and even a few F/A-18s) flying for European air
forces, not to mention the C-130. The Italians are still flying and
crashing ;) the F-104, which doesn't do anything for the morale of
their pilots.

The so-called 'two-way' street (in NATO procurement parlance) across
the Atlantic has massively favoured US contractors. Only the Brits,
who have an important stake in the T-45 Goshawk and AV-8 Harrier
programmes, have anything to feel good about. There are also a few
Italian G-222 flying for the US ANG, if I remember correctly, thought
I don't know their US designation (C-???).

>	My conclusion?  Airliner manufacturing is a prestigous, crown jewel
>that many countries desire to have.  However, the cost of entry is
>enormous.  The US, buoyed by WW2 manufacturing expansion, was strong
>enough to enter in the 1950s, funded by company internal money.  However,
>the Europeans, were not in as strong a position, and also were strongly
>influenced by socialist philosphies of government control of major
>industries.  Because of this, the Europeans have developed a tradition of
>government funding for their companies.  However, this will come to roost
>eventually, when the governments find that they have less and less to
>sink into an enterprise that is still not producing healthy returns.
>Throwing money at industries just to produce jobs is a loosing
>propositon, in the long run.

I'm with you on that one. But remember that most *current* European
governments have a much more liberal (in the sense that Hayek was a
liberal; I don't mean they're pinkos ;) attitude towards their
aircraft industries, largely because they are experiencing all sorts
of budgetary problems trying to meet the EMU convergence criteria.

Also, the French government is, at least publicly, committed to
Aerospatiale's privatisation. I wouldn't be surprised if either of the
only other two significant, publicly-owned aircraft firms in Western
Europe, the Spanish firm CASA and Alenia of Italy, were slated for
privatisation some time soon. The European governments simply no
longer have the public money available to fund these firms along with
everything else (unemployment and social security, for example, which
are after all much worthier causes than an overgrown industrial

Best Regards,
<URL:> [featuring frames]
Short History of Airbus available on the Web at: